Blockchain in Supply Chain Management is rapidly being integrated into many industries across multiple functions, in some cases revolutionizing processes and transactions.
The technology behind bitcoin is blockchain and it is distributed with digital ledger which records transactions in a series of blocks. It exists in two copies spread over multiple computers and it is secure because each new block of transactions is linked back to previous blocks and by making tampering practically impossible.
Blockchain in Supply Chain Management is one function that holds tremendous interest for the technology – in areas such as supplier payments, product traceability and contract bids and execution.
Our current supply chain is divided into several ways. It’s more difficult for customers or buyers to truly know the value of products because there is a significant lack of transparency in our current system.
In a same way, it’s extremely difficult to investigate supply chains when there is suspicion of unethical or illegal practices. They can also be highly inefficient as suppliers and vendors try to connect the dots on who needs what, when and how.
Blockchain in Supply Chain Management Problems
- Current SCM technology is archaic.
The technologies used to manage Blockchain in SCM are falling behind the growing interconnectedness and complexities of our global world. This presents an good opportunity for innovators to create value in the SCM industry.
- Stakeholders cannot maintain an adequate picture of their supply chain networks.
Within a given supply chain the data is fragmented into various data silos where very little data interoperability exists. In similar way, there is high information asymmetry and stakeholders have no incentive to send or share data. This makes even harder to ensure integrity of products as they flow through the supply chain.
- End consumers are demanding ever-higher levels of transparency.
Consumers want to know the origins of their particular products, how environmentally conscious they are, and if the company uses fair trade practices and this’ll gives added pressure on the supply chain stakeholders.
How Blockchain Can Support SCM?
A combination of blockchain technology in smart contract applications and integrated IoT (Internet of Things) sensors allow us to re-imagine the core systems we use to manage our global supply chains.
This new technologically driven vision might include:
- End consumers can see the entire lifecycle of a product before it hits the shelf
- Improved efficiency of global trade
- Minimized fraud or counterfeiting due to quality assurance sensors will tracks the location of materials in a supply chain
Blockchain Uses in Supply Chains
- Blockchain is highly secure since every block links to the one before it and after it. There is not one central authority over the blockchain, and it’s extremely scalable and efficient.
- Blockchain can increase the transparency and efficiency of supply chains and positively impact everything from warehousing to delivery to payment.
- The things that are necessary for integrity and reliability in a supply chain are provided by blockchain.
- Everyone on the blockchain can view the chain of ownership for an asset on the blockchain. Records on the blockchain cannot be deleted which is most important for a transparent supply chain.
Examples of Blockchain in Supply Chains
- Since blockchains allow for transfer of funds anywhere in the world without the use of a traditional bank, it’s very convenient for Blockchain in SCM that is globalized.
- In the food industry, it’s important to have solid records to trace each product to its source.
- The transparency of blockchain is also crucial to enable consumers to know they are supporting companies who they share the same values of environmental stewardship and sustainable manufacturing.
- Blockchain technology is used to track stones from the point they are minded right up to the point when they are sold to consumers. This ensures the company avoids ‘blood diamonds’ or ‘conflict’ and assures the consumers that they are buying the genuine article.
Blockchain Challenges in SCM
- Making Blockchain Supply Chain Ready
- Restoring Confidentiality to the Supply Chain with Blockchain
- Blockchain Scaling for Real-Time Global Supply Chains
Locus IT understands the unique requirements of Supply Chain Management and provides Blockchain SCM support and implementation services. For more information please contact us.